Ceat to Meet Aftermarket Demand through Outsourcing
When handed lemons, make lemonade…or when OE orders dwindle, produce tyres for the more profitable aftermarket. In spite of reports coming from India that vehicle makers are reducing output, Ceat Tyres – a company that traditionally has obtained about 20 per cent of its revenues from OE supply – is planning to increase its tyre production rather than cut it back.
“The least profitable sector for us has shrunk, giving us the opportunity to sell more to the more profitable ones,” said Arnab Banerjee, the company’s vice-president, sales & marketing. Ceat plans to boost its production in the short term through outsourcing, a necessary move while it awaits the construction of its own new facilities. “Looking at the robust replacement demand, right now we are unable to manufacture enough,” Banerjee added. “My number one priority is to secure supplies through outsourcing, since the two greenfield plants we are planning to set up would come on stream only over the next two-three years,”
Ceat currently sources TBR tyres from its Italian partner Pirelli, but is looking to expand its sourcing base. The company has identified manufacturers in China, Thailand, and Vietnam from which it can source finished products for the Indian market. Furthermore, according to Banerjee, Ceat is also evaluating the viability of entering the retreading segment.